Facing widespread criticism over his 2024-25 Budget, Minister of Finance Professor Biman Prasad has been praised for attempting to address the contentious issue of the 2012 Fiji National Provident Fund (FNPF) pensioners. These pensioners had their lawful contracts with FNPF unlawfully broken by the previous Bainimarama government, as acknowledged by the minister in his budget speech.
However, the solution proposed by the minister, which will restore the 2012 pensions without backpay, falls short of providing “permanent closure” to the issue. The minister noted that “all pensioners that reluctantly opted for a reduced pension rate will have their pension restored effective from 1st August 2024.” He further mentioned that the cost of reinstatement will be fully borne by the Government, with $4 million allocated for this year and an estimated $57 million over the next two decades.
Former USP lecturer Dr. Ganesh Chand stated on Facebook that the minister’s plan penalizes those who opted to withdraw their funds due to the reduced pension rates. Rishi Ram, a former senior public servant, also criticized the plan on social media, arguing that those who were coerced into withdrawing their funds are unjustly denied compensation.
Astute businessman Mark Halabe questioned why taxpayers, rather than the FNPF board, should bear the cost of restitution. In response, the Minister of Finance cited an Act by the former government that prevents these decisions from being challenged in court.
The issue at hand involves two groups of 2012 pensioners whose contracts were unlawfully breached. Both groups lost financially due to the illegal actions of the Bainimarama government, while FNPF gained financially from these losses. According to the original pensions contract, signed after retirement, pensioners transferred ownership of their lump sums to FNPF, and the contract specified monthly pension amounts approved by Parliament. This contract was deemed legally binding and irrevocable.
Independent FNPF consultants emphasized that any retrospective adjustment of existing pension benefits would be difficult under contract law. Thus, the minister’s current plan, which partially compensates Group A pensioners by restoring their pensions, fails to address the grievances of Group B pensioners who accepted a lump sum in place of their monthly pensions. Both groups are owed arrears of pensions, some of which should extend to the estates of deceased pensioners.
The financial responsibility for compensating the 2012 pensioners should lie with FNPF, not taxpayers, as FNPF was the contractual party and benefited financially from the pension reductions. The current FNPF board must recognize its fiduciary duty to correct this historical wrong.
A concrete plan should involve restoring all 2012 pensions from the month they were discontinued and compensating the estates of deceased pensioners. Payments should be spread over five annual installments starting August 1, 2025. The costs, while significant, are manageable given FNPF’s current financial stability and previous financial decisions.
Lastly, it is crucial for both the government and opposition MPs to unite and ensure a “permanent closure” to the 2012 pensioners’ issue, emphasizing the ethical obligation of the FNPF board to rectify past injustices. The inclusion of formal representatives of employers, unions, and pensioners on the FNPF board could enhance accountability and safeguard interests.